Deck 4: Accounting for the General and Special Revenue Funds

Question 1

Most interfund transfers are not eliminated in the government-wide statements.

Answer 1

False

Question 2

Special revenue funds are used when it is desirable to provide separate reporting of resources that are restricted or committed to expenditure for purposes other than debt service or capital projects.

Answer 2

True

Question 3

When the General Fund purchases water from an enterprise fund,the General Fund would credit expenditure.

Answer 3

False

Question 4

When closing the books for the General Fund,an excess of revenues over expenditures and transfers out would be credited to Fund Balance.

Question 5

The purpose of fund accounting is to segregate those financial resources that have constraints or limitations on their use to demonstrate compliance with those limitations.

Question 6

Interfund transactions are of particular interest to financial statement preparers and users since failure to properly report these transactions will result in two funds being misstated.

Question 7

The General Fund accounts for any resources not reported in one of the other funds.

Question 8

Every general purpose government may have more than one General Fund.

Question 9

Receivables from sales taxes are recorded in the period that the retailer submits the taxes to the government.

Question 10

A common use of special revenue funds is to account for (noncapital)intergovernmental grants when federal or state governments provide resources to local governments

Question 11

When a special revenue fund accounts for grants that are awarded on a reimbursement basis,revenues are recognized only after qualified expenditures have been recognized.

Question 12

In special revenue funds,revenues are recognized when available and measurable.

Question 13

In the General Fund,revenues are recognized when earned and available

Question 14

Special Revenue Funds may be used whenever a government wishes to segregate income for specific purposes.

Question 15

In the General Fund,revenues are recognized when measurable and earned.

Question 16

Resources appropriately reported within proprietary or fiduciary funds are included in special revenue funds.

Question 17

Transactions between funds of the same government are not assumed to be arm's length in nature.

Question 18

Special revenue funds are used if the resources are required to be used to acquire capital assets or for the payment of interest and principal on long-term debt.

Question 19

Governmental fund financial statements are prepared using the accrual basis of accounting.

Question 20

Governmental fund financial statements are prepared using the current financial resource measurement focus.

Question 21

Government fund statements use the modified accrual basis,while government-wide,proprietary fund and fiduciary funds use accrual basis.

Question 22

A Special Revenue Fund may not have a positive Unassigned Fund Balance

Question 23

Interfund services provided and used are recognized as direct Increases and Decreases in Fund Balance

Question 24

Expenditures for claims and judgments,compensated absences,and special termination benefits should be recognized in the General Fund whether or not the liabilities are to be paid with available resources.

Question 25

Special revenue funds are used when it is desirable to provide separate reporting of resources that are assigned to expenditure for purposes other than debt service or capital projects.

Question 26

Under the purchases method to account for supplies inventory,an asset is recorded when inventories are acquired,and the expenditure is recorded when the supplies are consumed.

Question 27

The Debt Service Fund would record the receipt of money from the General Fund as nonoperating revenue on the activities Statement of Revenues,Expenditures,and Changes in Fund Balance.

Question 28

Expenditures for claims and judgments and landfill post-closure care costs of governmental funds should be recognized to the extent that the liabilities are going to be paid with available resources.

Question 29

GASB requires both extraordinary and special items to be reported separately after other financing sources and uses in the General and Special Revenue fund financial statements

Question 30

When closing the General Fund and Special Revenue Funds of a state or local governmental unit,the balance of the operating statement accounts and the balances of the budgetary accounts are closed

Question 31

The fund balance represents the excess of fund assets over fund liabilities.

Question 32

Only the General Fund may have a positive Unassigned Fund Balance

Question 33

Governmental fund financial statements are to be prepared on the accrual basis of accounting.

Question 34

Government and Fiduciary fund statements use the modified accrual basis,while government-wide,and proprietary funds use accrual basis.

Question 35

After closing entries,a special revenue fund's Fund Balance account represents the net amount of resources available for future appropriation

Question 36

Interfund services provided and used are recognized directly as Revenues and Expenditures.

Question 37

Proceeds from the Sale of Land in the General Fund is a source of funds and would be closed at year end.

Question 38

A special item is a significant transaction that is unusual or infrequent,but within the control of management.

Question 39

When establishing funds,governments should attempt to minimize the number of special revenue and other funds,instead using functional classification to record transaction detail.

Question 40

When establishing funds,governments should attempt to have a large number of special revenue and other funds to provide the user with maximum detail to understand the transactions.

Question 41

Which of the following is true with respect to Special revenue funds?

A) Special revenue funds are used when it is desirable to provide separate reporting of resources that are restricted or committed as to expenditure for purposes other than debt service or capital projects.
B) Special revenue funds are used when it is desirable to provide separate reporting of resources that are designated for specific purposes.
C) Special revenue funds are used when it is desirable to provide separate reporting for funds provided by other governments to support capital projects.
D) Both B and C

Question 42

Which of the following is true regarding modified accrual accounting?

A) Modified accrual accounting requires that all expenditures be recognized on the cash basis.
B) Revenues are recognized in the period in which they become available and measurable, and expenditures are recognized at the time a liability is incurred, except for principal and interest on long-term debt.
C) Modified accrual accounting is required for all fund financial statements.
D) All of the above.

Question 43

The journal entry to record the prior year's deferred Inflows: property taxes (those expected to be collected more than 60 days beyond year-end)as revenue in the current year would include:

A) A debit to Revenues Control
B) A debit to Deferred Inflows: Revenues
C) A credit to Revenues Control
D) B and C would both be included in the journal entry

Question 44

The journal entry to record the property tax levy for a municipality would include:

A) A debit to Bad Debts Expense
B) A credit to Estimated Uncollectible Current Taxes
C) A credit to Taxes Receivable - Current
D) A and B would both be included in the journal entry

Question 45

The journal entry to record the budget of a Special Revenue Fund would include:

A) A debit to appropriations Control
B) A debit to Estimated Revenues Control
C) A credit to Estimated Revenues Control
D) None of the above, Special Revenue Funds do not record budgets

Question 46

Reciprocal interfund activity:

A) Does not include interfund loans
B) Is the internal counterpart to exchange transactions
C) Includes interfund transfers
D) None of the above

Question 47

GASB standards for property tax revenue recognition under the modified accrual basis of accounting provide that revenue is permitted to be recorded if the expected amount to be collected can be determined and collection is reasonably assured,even if the taxes are expected to be collected more than 60 days after the fiscal year end.

Question 48

Which of the following statements is not true regarding modified accrual accounting?

A) Expenditures and fund liabilities are recorded when goods and services are received.
B) Debt service expenditures for principal and interest are accrued.
C) Expenditures for claims and judgments and landfill post-closure care costs of governmental funds should be recognized to the extent that the liabilities are going to be paid with available resources.
D) Compensated absences and special termination benefits of governmental funds that will not be paid with available resources should be reported as liabilities in the government-wide statements.

Question 49

Which of the following is an interfund transaction?

A) Interfund services provided and used
B) Interfund transfers
C) Interfund loans
D) All of the above are interfund transactions

Question 50

When establishing funds,governments should never attempt to minimize the number of special revenue and other funds,instead using functional classification to record transaction detail.

Question 51

Which of the following is false with respect to Special revenue funds?

A) Resources appropriately reported within proprietary or fiduciary funds are excluded from special revenue funds.
B) A special revenue funds would be used to account for taxes which are required by state law to be used by the government to support specific activities.
C) Special revenue funds may be used for any designated purpose to segregate revenues and ensure compliance with restrictions.
D) None of the above

Question 52

Which of the following is correct with respect to accounting for supplies inventories in a governmental fund?

A) Supplies inventories may be recorded using either the purchase method or the consumption method.
B) An amount equal to the ending balance of supplies is reported as Nonspendable Fund Balance.
C) The consumption method is preferable over the purchase method since it requires no adjustment to supplies expense when preparing the government-wide statements.
D) All of the above are correct

Question 53

Under the modified accrual basis of accounting,GASB standards for property tax revenue recognition provide that revenue should not be recognized for property taxes collected:

A) More than 90 days after fiscal year end.
B) More than 60 days after fiscal year end.
C) More than 30 days after fiscal year end.
D) After fiscal year end.

Question 54

Which of the following is true regarding the use of Special Revenue Funds?

A) Special Revenue Funds may be used whenever a government wishes to segregate income for specific purposes.
B) Special Revenue Funds are appropriate if the sole source of resources are assigned funds
C) Special Revenue Funds may only be used when a substantial portion of the resources are provided by restricted or committed revenue sources.
D) Once a Special Revenue Fund is established, it will continue to be a Special Revenue Fund until all resources are exhausted.

Question 55

The journal entry to record an encumbrance would include:

A) A debit to Encumbrance Control
B) A debit to Budgetary Fund Balance - Reserve for Encumbrances
C) A credit to Budgetary Fund Balance - Reserve for Encumbrances
D) A and C would both be included in the journal entry

Question 56

Regarding interfund transactions,which of the following is not correct?

A) Transaction between funds are not assumed to be arm's length in nature
B) Interfund transactions must be repaid.
C) Failure to properly report interfund transactions will result in two funds being misstated.
D) Interfund reimbursement is a payment by one fund to second fund to repay it for a purchase which belongs in the first fund.

Question 57

Which of the following statements is not correct?

A) Transactions between funds of the same government may not be assumed to be arms' length in nature.
B) Most interfund transactions are eliminated in the government-wide statements
C) Interfund reimbursements are classified as other financing sources or uses
D) Interfund transfers are classified as other financing sources or uses

Question 58

The journal entry to record the re-establishment of encumbrances that were outstanding at the close of the prior period would include:

A) A credit to Budgetary Fund Balance - Reserve for Encumbrances
B) A debit to Budgetary Fund Balance - Reserve for Encumbrances
C) A credit to Encumbrance Control
D) A and B would both be included in the journal entry

Question 59

The journal entry to write off an uncollectible property tax receivable for a municipality would include:

A) A credit to Estimated Uncollectible Current Taxes
B) A debit to Bad Debts Expense
C) A credit to Taxes Receivable - Current
D) B and C would both be included in the journal entry

Question 60

Nonreciprocal interfund activity:

A) Includes interfund services provided and used
B) Includes exchange-like transactions
C) Includes interfund loans
D) Includes interfund transfers and reimbursements

Question 61

The Town of Little River expects to collect $90,000 in sales tax from the state government within 30 days of the end of fiscal year 2015 for retail sales taking place in fiscal year 2015. What entry,if any,would Little River make at the end of 2015?

A) Taxes receivable - current 90,000 Deferred Inflows 90,000
B) Taxes receivable - deferred 90,000 Revenues control 90,000
C) Taxes receivable - current 90,000 Due from state government 90,000
D) Due from state government 90,000 Revenues control 90,000

Question 62

A donor pledged $200,000 to the fund raising drive of a local government to assist its police officers in obtaining the latest technology. The pledge was made on July 16,2014,but was conditioned on the government raising an additional $200,000 from other donors. By the fiscal year-end of June 30,2015,the local government had raised only $5,000 from other donors. What entry would be made for the initial pledge by the local government during the year ended June 30,2015?

A) No entry is required until the condition is fully met.
B) Debit a receivable and credit deferred inflows.
C) Debit a receivable and credit Fund Balance.
D) Debit a receivable and credit revenue

Question 63

Under modified accrual accounting,revenues are recognized when measurable and:

A) Available.
B) Collected.
C) Earned.
D) Expenditures have been made.

Question 64

The entry to re-establish encumbrances related to purchase orders from the prior year would include:

A) A debit to Budgetary Fund Balance - Reserved for Encumbrances.
B) A debit to Encumbrances Control.
C) A credit to Accounts Payable
D) None of the above.

Question 65

When would a special revenue fund be deemed to have satisfied the eligibility requirement of a reimbursement-type federal grant,under GASB Statement 33?

A) Only after work is completely finished for the project.
B) When a plan for use of the funds has been developed and approved.
C) Only as qualified expenditures are incurred.
D) When the grant is first approved by the granting agency.

Question 66

The City of Pine Cove levied property taxes for the fiscal year ended June 30,2015,in the amount of $10,000,000.It is estimated that 2% will not be collected.During the year ended June 30,2015,$8,500,000 in property taxes was collected.It is estimated that $550,000 will be collected during the next 60 days,$765,000 will be collected after 60 days,and $185,000 will not be collected.What is the maximum amount Lonesome Pines can recognize as property tax revenue for the fiscal year ended June 30,2015,in its Governmental Funds Statement of Revenues,Expenditures,and Changes in Fund Balances,assuming there were no unpaid property taxes at the end of the previous year?

A) $8,500,000.
B) $9,050,000.
C) $9,815,000.
D) $10,000,000.

Question 67

The General Fund of the City of Lexington approved a tax levy for the calendar year 2015 in the amount of $2,000,000. Of that amount,$30,000 is expected to be uncollectible. During 2015,$1,750,000 was collected. During 2016,$100,000 was collected during the first 30 days,$50,000 was collected during days 31-60,and $70,000 was collected during the days 61-90. During the post-audit,you discovered that the City showed $2,000,000 in revenues. How much revenue should the City recognize in 2015 from this tax levy?

A) $ 1,850,000
B) $ 1,900,000
C) $ 1,920,000
D) $ 2,000,000

Question 68

Indicate which of the following use Modified Accrual Accounting?

Question 69

What is the effect on the General Fund's fund balance when capital assets are purchased during a year from General Fund revenues?

A) Fund balance is increased.
B) Fund balance is decreased.
C) There is no effect, since one asset (cash) is replaced by another (capital asset).
D) None of the above, capital assets must be purchased through a capital projects fund.

Question 70

The City of Brownsville had a balance in the Budgetary Fund Balance -- Reserve for Encumbrances account at the end of 2014 in the amount of $90,000. During 2015,all purchase orders related to the $90,000 were filled,and the invoice amount was $91,200. Which of the following would be true regarding the Statement of Revenues,Expenditures,and Changes in Fund Balances for 2015? (assume encumbrances do not lapse)

A) The amount shown for Expenditures would include only the $1,200.
B) The amount shown for Expenditures would include only the $90,000.
C) The amount shown for Expenditures would include the $91,200.
D) The amount shown for Expenditures would not include items related to orders placed in 2014.

Question 71

Which of the following is not likely to be recorded in a special revenue fund?

A) Phone fees restricted to supporting the emergency 911 access system.
B) Hotel taxes restricted to promoting tourism.
C) Sales taxes restricted to courthouse additions.
D) State motor fuel tax restricted to road maintenance.

Question 72

Which of the following accounts of a governmental unit's General Fund is credited to close it at the end of the fiscal year?

A) Appropriations Control.
B) Other Financing Sources-Transfers In.
C) Budgetary Fund Balance -- Reserve for Encumbrances.
D) None of the above.

Question 73

The Expenditures control account in the General Fund is debited when:

A) Supplies are ordered.
B) The budget is recorded.
C) The books are closed at the end of the year.
D) Equipment previously ordered is received.

Question 74

Which of the following accounts of a governmental unit's General fund is debited when supplies previously ordered are received?

A) Encumbrances Control.
B) Reserve for Supplies.
C) Budgetary Fund Balance -- Reserve for Encumbrances.
D) Appropriations.

Question 75

Short-term loans which are backed by the taxing power of the governmental unit and used to meet working capital requirements are called:

A) Appropriation loan.
B) Inter-fund loans.
C) Other financing sources.
D) Tax anticipation notes.

Question 76

The initial transfer of cash from the General Fund to establish a motor pool internal service fund would require the General Fund to credit Cash and debit:

A) Investment in Internal Service Fund.
B) Other Financing Uses-Transfers Out Control.
C) Expenditures - Vehicle maintenance.
D) Accounts Receivable-Internal Service Fund.

Question 77

When payrolls and other liabilities are incurred and must be paid before substantial amounts of cash will be collected,what type of short-term note is desirable and secured by a government's power to tax?

A) Tax Relief Note Payable.
B) Tax Budget Note Payable.
C) Tax Anticipation Note Payable.
D) Tax Encumbrances Note Payable.

Question 78

Expenditures are generally recorded and fund liabilities are recognized

A) When goods and services are received, but only if resources are available in the fund.
B) When invoices are paid.
C) When purchase orders are issued, regardless of whether or not resources are available in the fund.
D) When goods and services are received, regardless of whether or not resources are available in the fund.

Question 79

When accounting for the General Fund,the Encumbrances Control account is credited when:

A) A purchase order is approved.
B) The budget is approved.
C) An invoice is paid.
D) A purchase order is filled or canceled.

Question 80

When supplies ordered by a governmental unit are received at an actual price which is less than the estimated price on the purchase order,the Encumbrance Control account is:

A) Credited for the actual price on the purchase invoice.
B) Credited for the original estimated price for the supplies.
C) Debited for the original estimated price for the supplies
D) Debited for the actual price on the purchase invoice.